ABI Says Tax Credit Would Help Buoy Workplace
Retirement Planning

The Association of British Insurers (ABI) claims that
credit would help turn around current government
efforts to encourage low-income workers to save for
retirement, the Edinburgh News reported.
Pension p
roviders say the current 1% administrative fee cap
hasn’t given them much room to help provide workplace
advice.
As a result, man
y small businesses, while following their legal
obligation to sponsor pension plans, are not actively
promoting them to their workforce, according to the
report.

Scrapping the fee cap – which ABI said makes the
pensions hard to promote, sell and administer – and
giving employers a financial incentive in
providing pension-related financial advice would be a
step in the right direction.

The ABI’s suggested reforms comes with the group’s
report that current government efforts to prompt more
employee retirement saving have largely been a bust
with
82% of the 350,000 pension plans launched in April 2001
still having non-existent membership rolls. They were, ABI
claimed, mere
“empty shells.”

Average monthly contributions of just £155 also
suggested that about three million people earning less
than £20,000 a year – the original target market – were
not buying the plans, the ABI said.
S
econd quarter stakeholder pensions sales were down
10% to 166,245 policies, compared to the same period last
year, and the ABI also said that 47% of all
payments into the plans were asset transfers – rather
than new investments.

However, the sales figures represent a slight
improvement on the ABI’s November 2002 report, which
showed 90% of plans were empty shells, with 9% of
employers paying into the funds, compared with 13% in
the latest poll.